Forecasting: Range of compact car rush may create oversupply in the U.S.

2011 Ford Fiesta

A slew of small cars are being prepared to hit U.S. dealerships within the next year. However, industry forecasting firm CSM Worldwide says that the move may create an oversupply of compact vehicles in the country at a time when gas prices look to remain stable.

FoMoCo, General Motors and Chrysler, are all planning on introducing small fuel-efficient and electric-vehicles in 2010 to meet strict fuel-economy standards and to cater to a change in buyer behavior towards compact cars.

According to Michael Robinet, vice president of forecasting at CSM, if gas prices stay at today’s level of under $3 a gallon there will be “extreme pressure to channel smaller vehicles in the market due to CAFE and emissions standards” leading to an increase in incentives and a decrease in profitability.”

GM plans on having its Chevrolet Cruze and Volt on the market in the third-quarter of 2010. Ford’s Fiesta will launch next summer along with a redesigned Focus in the later part of 2010. Chrysler and Fiat have confirmed that they will offer the Fiat 500 subcompact to the U.S. at the end of next year.

– By: Stephen Calogera

Source: Reuters